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Thread: Mutual Funds - Tax Benifits

  1. #1
    Enthusiast sachin121ja's Avatar
    Join Date
    Dec 2010

    Default Mutual Funds - Tax Benifits

    As my dividend receipts from mutual fund units were tax free under section 80 L, will I loose because of the new budget provision whereby my mutual fund will pay 10% tax on total dividend distributed and indirectly even I will end up paying the tax?

  2. #2


    The above statement is partially true. 10% tax on dividend paid is not applicable for funds which have invested more than 50% in equity for next three years. Hence, if you have invested in an equity scheme, you will not loose out for the time being. However, in case of debt funds, your statement is true. Reliance Mutual Fund House advisors can be contacted for clear cut information at par with government policies on tax related from time to time.

  3. #3
    New Member
    Join Date
    Jul 2017


    Tax-saving Benefits of Mutual Fund Investments

    Mutual funds may be tax-efficient investment avenues that often helps lessen your tax burden and also at the same time frame boost your wealth.

    ELSS – An Ideal Tax-saving Instrument - Equity Linked Savings Schemes (ELSS) offers an option that is easy obtain tax benefits and a way to harness the potential upside of investing during the equity market.

    Exactly what are ELSS Funds?

    1. ELSS funds are diversified equity funds with a lock-in period of 3 years.
    2. Offer tax deduction as high as 1.50 lakh under Section 80C of the Income Tax Act, 1961.

    Provide double advantageous asset of tax saving and capital gains.

    Tax-saving Benefit of ELSS Funds?

    1. Income tax benefit - Investments made in ELSS schemes meet the criteria for deduction from taxable income under Section 80C of this Income Tax Act.
    2. Lower lock-in period - when compared to traditional investment avenues like PPF, NSC under section 80C for the Income tax Act, ELSS funds have the shortest lock in period of 36 months.
    3. Tax-free dividends/Capital gains - Dividends declared under the ELSS scheme during the investment period are tax-free. The gains regarding the sale of ELSS units are treated as long-term capital gains, and are also not susceptible to tax.
    4. Higher return potential - ELSS funds invest a big part of the fund in equity, which despite short-term volatility has the potential to construct wealth throughout the long haul.

    Who should invest in ELSS Funds?

    1. Investors trying to find wealth creation over the long haul.
    2. Investors hunting for tax deductions under Section 80C.
    3. Investors having a time horizon of three years or even more.

    How to begin an ELSS account?

    There's two ways to invest in ELSS Funds:

    Invest a fixed amount every month through a Systematic Investment Plan (SIP) in ELSS and ease the duty of large investments to the end for the financial year.

    Invest a lump sum amount at any point of the time.

    Why SIP may be the method that is best for ELSS?

    One of the better ways to invest would be to save and invest on a basis that is regular. SIP is a good investment method by which an investor invests amounts that are small mutual funds at regular intervals.

    In addition, SIP helps an investor take benefit for the volatility into the stock markets by rupee cost averaging and helps garner the benefit of compounding. Investment in an ELSS through SIP provides an investor the combination that is best of tax savings and capital appreciation. The minimum investment in an ELSS through the SIP route is often as low as 500.

    The low lock-in period of three years compared to other tax savings instruments additionally the potential to take full advantage of growth through equities make ELSS funds a investment option that is preferred.

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